Internal Revenue Service late filing penalties start the first day after the return is due. Whether you incorporated as a limited liability company, a C-corporation or an S-corporation, your tax penalty will grow the longer you wait to file the return. If you cannot meet the filing deadline, an LLC can get a five-month extension and C- and S-corporations a six-month extension of time by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax Information, and Other Returns. You will not be penalized for filing late but the IRS will charge you interest on the unpaid tax amount.

LLC Late Filing Penalties

If you incorporated as an LLC and are classified as a partnership for taxation purposes, your tax return is due by the 15th day of the fourth month of the tax year. For each month or portion of a month the return is late, you are penalized $195 for a maximum of 12 months multiplied by the number of managing members. For example, if your LLC is four months late filing the return and you have three managing members, multiply $195 by five months multiplied by three managing members to get your penalty of $2,925.

S-Corporation Late Filing Penalties

S-corporation returns are due by the 15th day of the third month of its tax year. For each month or portion of a month the return is late, you are penalized $195. That amount is multiplied by the number of corporate shareholders you have. For example, if your tax return is three months late and you have four shareholders, compute your late filing penalty by multiplying $195 by three months multiplied by four4 shareholders to get your penalty amount of $2,340.

C-Corporation Late Filing Penalties

If you incorporated as a C-corporation, your tax return is due by the 15th day of the third month of its tax year. The IRS penalty is equal to 5 percent of the unpaid tax amount for each month or portion of a month the taxes remain unpaid. For example, if the corporation’s tax is $3,000 and you are filing three months late, multiple $3,000 by 5 percent times three months to get your late filing penalty of $450. The maximum IRS-imposed penalty is 25 percent of the unpaid tax.

Additional Late Filing Penalty

If you own a C- or S-corporation and taxes are due with the return, an additional ½ of 1 percent, or .005, penalty is imposed on the unpaid tax amount for each month the return remains unfiled. For example, if your late filing penalty is $1,000 and your corporation’s income tax is $4,000, multiple $4,000 by .005 percent to get the $20 penalty amount. Add the $20 to the $1,000 late filing penalty for a total penalty of $1,020. The penalty is limited to 25 percent of the unpaid tax.

About the Author

Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.